Cost Effectiveness of Temporary Storage Tents

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By: Roshni Nair -- Lead Analyst, Engineering and Construction

20 October, 2019

Cost Effectiveness of Temporary Storage Tents
ARTICLE

cost-effectiveness-temporary-storage-tents

Abstract

The global construction industry is expected to grow by an average rate of around 3–4 percent between 2018 and 2022. The U.S., China, and India expected to hold an approximate 50 percent of shares worth $87 trillion in incremental construction to be spent over the next 15 years. North America is expected to grow at a compound annual growth rate (CAGR) of 4–5 percent to reach $1.78 trillion in 2019, with an increase in investment in the industrial, public, and residential construction activities. In the next 1–2 years, labor shortage in the U.S., and the retiring population in Canada are expected to lead to an increase in labor cost by 3–5 percent in the North American construction industry. The cost of construction materials is expected to increase by 2.4 percent in 2019 compared to the previous year driven by the tight labor market and a growing marketplace.

The European construction market is valued at $2.8 trillion (2018), accounting for approximately 25 percent of the total world’s construction output. More than 10 percent of total construction output is contributed by the industrial sector, and the commercial and retail sector contributes more than 15 percent of the total market. The construction market in Asia Pacific (APAC) is expected to grow at a CAGR of 4–5 percent between 2018 and 2022. The “Made in China 2025” initiative is expected to drive the demand for construction in the manufacturing sector. Increasing labor costs and workforce shortages are the major reasons for the unattractiveness of the Chinese construction industry.

The industrial sector is one of the fastest growing sectors with construction needs growing at a rapid pace across economies. The major constraints faced are labor shortages and weak economies. Construction of permanent buildings for a short term project or for storage spaces proves to be time consuming and a costly affair. Companies across industries are trying to reduce the overall construction costs and time taken to construct a building. The temporary storage sector provides a positive outlook to the industrial sector owing to the cost and time savings it provides, in addition to tackling the shortage in labor and availability of raw materials.

This paper discusses the use of temporary storage tents in the non-residential sector as a substitute for permanent storage structures in order to reduce overall construction costs and time required for construction. The opportunities that have surfaced in the temporary storage space sector will help tackle the challenges in the construction industry.

Introduction - Temporary Storage Tents

A temporary storage building is a swift and efficient option that can be used for factory and storage requirements. These structures are built with steel frames and PVC fabric which do not require much effort in terms of installation. It is an effective substitute for the permanent structures that are constructed for small factories and warehouses. They are cost effective and provide flexibility in terms of expansion and customization. Another advantage of using temporary storage tents is that they can be easily dismantled and relocated to another site with a similar future requirement.

A temporary storage building can be used as a simple storage space across industries such as retail, industrial, etc., or it can be used as a temporary facility for a factory space or pharmaceutical facility. It can accommodate customization such as speciality doors, HVAC, pharmaceutical modules, etc. Modular, pre-assemblies, offsite pipe fabrication, and pre-fabricated buildings are becoming major trends in developed countries owing to the time and cost savings.

The differences in temporary storage tents between the sectors are:

  • Retail: Basic storage for packaging materials, inventory, etc.
  • FMCG: Storage area for packaging materials, inventory; storage area with control on temperature, wind, snow, etc.
  • Pharmaceutical: Storage area for pharmaceutical products; storage area with control on temperature, wind, snow, etc.; Modules that can be highly customized based on niche requirements.

Traditional Construction Process 

traditional-construction-process

Temporary Storage Tent Construction Process

temporary-storage-tent-construction-process

Types of Temporary Storage Tents

PVC/PVC
  • This model can be quickly assembled with PVC sheeting used as the walls and roof. It has a life span of up to 20 years.
  • This type of tent is generally used for storage areas and simple covering where temperature fluctuations do not occur. However, an anticondensate sheeting can be provided inside the tent to protect against condensation.
  • The major advantages of PVC/PVC tent is swift delivery, setting up, and minimal upkeep.
PVC/Metal Sheets
  • This tent model includes a fast mounting structure that consists of a PVC sheet roof and metal sheet walls.
  • It is mostly preferred as a storage room for machines, different kinds of materials (construction materials, packaging materials), etc. An anticondensate sheeting can be provided inside the tent to protect against condensation.
  • This model is largely preferred owing to the balance between cost effectiveness and diversity of usage.
PVC/ Insulating Panels
  • This model is an insulated tent that is made of insulated panel walls and a double PVC sheet roof.
  • This model allows the passage of light into the tent. However, it helps control heat and condensation within the tent.
  • It can be used as a storage area for sensitive goods as well as a temporary office space if necessary.
  • Quick delivery, set up, and easy processes for the acquisition of necessary licenses are added advantages of this type of tent.
Insulating Panels
  • This tent model is generally used as a small production facility or an office space. It consists of sandwich panels or metal sheets for the walls and roof of the structure. The tent can be insulated or non-insulated.
  • Quick assembly of these kinds of tents enable immediate occupancy and use. This model has better technical safety and the simple procedures for installation and permissions give it a higher advantage.
Metal Sheets
  • This tent model is almost similar to the previous model. The major difference between the two is the kind of material used for the roof and walls. In this model, the roof and walls are made of galvanized metal sheets where thermal insulation cannot be provided.
  • Due to the lack of thermal insulation, it is generally preferred as a storage space for products unaffected by weather conditions, and machinery.
Customized Tents
  • Apart from the common types of readymade tents available, they can also be customized based on the specifications and requirements of the client.
  • The materials used in the walls and roof, type of flooring, size of the tent, insulation, lighting, etc., can be varied according to specified requirements. It can also be extended, dismantled, and reused at different locations.

Temporary Storage Tent – Impact on Overall Cost

It is clearly indicated in the chart below that the major chunk of the cost is attributed to raw materials. This is mainly due to the decreased expenditure required for all other cost components in comparison to the traditional method of construction.

cost-structure-storage
Source: Beroe Analysis

parameters

*Prices are exclusive of VAT for a temporary structure without ground works and accessories. Purchase: excluding lifting equipment, and installation and transportation costs. Hire: excluding lifting equipment, and installation/ deinstallation and transportation costs.

Climatic conditions such as snow and wind, and span and structure height might result in increase in prices.

Below is the comparison of cost breakup based on region (sector-wise):

storage-tent-cost-comparison
Source: Beroe Analysis, Expert Input

storage-tent-cost-comparison
Source: Beroe Analysis, Expert Input

The breakup costs mentioned for temporary storage tents in all regions are mostly dependent on external factors such as the quality of products available in the market, labor conditions, climatic conditions, etc.

storage-tent-cost-comparison
Source: Beroe Analysis, Expert Input

Adoption of Temporary Storage Tents

level-of-adoption

Pros

Cons

Reduced wastage of material

Logistics challenges when the structure is bulky

Higher quality control and precision

Restrictions on the span and configurations

Labor team is intact, and if planned properly, economies of scale can be leveraged to save costs

If new to the process, negotiating on profit margins, overheads, etc., will be difficult due to lower transparency

Higher safety of laborers

Renovation, if required, will be more difficult as there will be fewer players in the market

Lesser time to install

 

Factors affecting Overall Cost

The variation in cost across countries include the various components that affect the overall cost after the product leaves the manufacturing site. Some cost components are logistics, installation, etc.

Impact of Raw Material Cost

Impact of Installation Cost

Other Factors affecting Cost

  • Steel is one of the major raw materials in a storage tent, and a fluctuation in price could affect the final price of the structure
  • The country where the pre-engineered metal building (PEMB) structure is manufactured is also a strong determinant of the PEMB structure cost, as the strength of the currency could impact the steel price in the event of steel being imported. The demand-supply situation for steel in the country could impact the steel price as well
  • Installation is highly dependent on certified and well qualified personnel, like welders. A shortage in the availability of such personnel in the construction location could result in an increase in cost since these personnel would have to be sourced from other countries, or higher costs than the industry average would have to be incurred for limited resources to avail their services
  • The other factors that influence price increases could be the extent of infrastructure availability in the installation location, which would impact the logistics cost
  • There are several anti dumping duties imposed by western countries on Chinese imports, which is a key cost parameter

Temporary Storage Tents – Financial Benefits

  1. Reduced Construction Cost: This approach enables cost savings anywhere between 5-30 percent compared to other traditional methods of construction. This cost saving arises as a result of reduced labor force requirements onsite, economies of scale which can be achieved in procuring raw materials, and reduction in wastage of materials, etc.
  1. Cost Savings in Building Maintenance: Storage tents often incorporate a number of building features, like natural and LED lighting, which aim at improving the overall energy efficiency of the building, reducing building maintenance cost. Temporary warehouse tents offer a significant amount of cost savings in annual construction maintenance costs compared to their counterparts.
  1. Tax Benefits: Although there are no direct tax benefits for tents in developing countries like India, China, and Brazil, owners can use this approach to gain credits for green buildings and access tax benefits associated with such buildings. They also offer an added tax benefit because they have a higher property value depreciation rate compared to a traditional building, thereby, reducing property tax.
  2. Faster Turnaround Times: Quick construction schedules associated with the tent assembly approach enable the project owner to gain quicker access to the storage/warehouse facility. This provides the clients a quick solution for their requirements. This leads to a quick turnaround time.
  3. Reusability and Resellability: These tents can be dismantled and relocated/reused at another location. It also permits an easy extension of buildings whenever needed. Tents can also be resold when they are not required anymore. This aspect of tent installation increases financial benefits for the end user.

Is it a Permanent Solution?

Temporary storage units are being used as semi-permanent and permanent storage solutions by companies in the industrial sector (automotive, FMCG, F&B)

            Permission is required if:

      • The height is more than 5 meters/ if it is within 10 meters of a boundary wall
      • The tent is taller than the highest building within 15 meters of boundary

These tents can be used as efficient storage spaces on a long-term basis, and are preferred by industrial clients owing to the time and cost effectiveness of the solution.

 

 

References

https://technology.ihs.com/586788/smart-lighting-and-connected-lighting-controls-market-to-double-by-2020

https://www.temporarywarehouse.com/temporary-warehouse-cost-advantages/

https://www.shelterlogic.com/6-benefits-to-using-a-temporary-storage-solution/

https://www.mahaffeyusa.com

https://eurocodes.jrc.ec.europa.eu/doc/WS2008/EN1991_6_Formichi.pdf

https://codes.iccsafe.org/content/IBC2018/chapter-31-special-construction?site_type=public

https://sso.agc.gov.sg/SL-Supp/S807-2018/Published/20181212?DocDate=20181212

https://www.abcb.gov.au/Resources/Publications/Education-Training/Temporary-Structures

https://archive.org/details/za.sans.10400.a.2010

https://www.herchenbach.co.uk/temporary-buildings/prices.htm

https://www.logisticsmiddleeast.com/article-13705-case-study-temporary-vs-permanent-warehouses